Debt-to-income ratio too high. Underwriting guidelines set maximum ratios of total debt payments to income. Debt payments include mortgage payments, property taxes, homeowners’ insurance, mortgage insurance, and payments that extend beyond the next six months including: home equity credit lines, other revolving accounts, credit card debt that you don’t pay off at month-end, auto loans, student loans and alimony and child support payments. If your ratio is too high, you may be denied a loan or a amount sufficient to buy the home of your choosing. But there may be ways to reduce your debt payments. Obviously, and as set forth in Part 1, paying down your long-term credit card debt helps. And lowering your monthly debt service by a rate-reduction refinance will reduce your mortgage payment and improve your ratio. Next: Job Issues.
